Exchange-traded funds aren’t slowing down. Firms launch new ETFs every day, assets continue to pour in, and investors and providers alike are starting to wade into previously uncharted waters.
ETFs collected $540 billion in new money over the first six months of 2025, surpassing their total from the first half of 2024. On the product side, 464 new ETFs have already come to market through June, fast approaching 2025’s full-year record of 726 launches. Notable launches so far this year include the first public-private credit ETF, countless new buffer, covered call, and active ETFs, crypto ETFs, and even money-market ETFs.
Below I’ll cover some of these developments and check in on our beginning-of-the-year ETF predictions. So far so good, but there’s sure to be much more to come in what has already been a feverish 2025 for ETFs.
Prediction 1: Active ETFs Outnumber Passive ETFs
This was inevitable. And it didn’t take long. By the end of June, there were 2,226 active ETFs and 2,157 passive ETFs on sale to US investors. Asset managers have fully embraced the tax-efficient wrapper, meeting demand from investors who continue to throw money at the space. There’s nuance to the active ETF story, though.
Some of the most popular active ETFs aren’t all that active. Most of what has taken off so far follows a quantitative or rules-based strategy; they’re labeled “active” because they don’t track an index. Examples include options-based strategies like defined outcome or covered call ETFs, diversified quantitative strategies from firms like Dimensional and Avantis; Vanguard and Schwab are even pushing into low-touch and low-cost active bond ETFs.
Active ETFs are soaring, but, for now, most of the growth and interest have been in these types of strategies. Traditional active managers like Capital Group and T. Rowe Price have also found sustained success in ETFs, but rules-based ETFs are likely to continue leading the active ETF charge.
Story 1: Private Asset ETFs
A major trend in ETFs, and a hot topic at this year’s Morningstar Investment Conference, is private market investing. At the conference, Apollo CEO Marc Rowan pitched broadening access to private markets beyond institutional and high-net-worth investors. Vanguard CEO Salim Ramji also sees wider adoption but cautions that progress will take time. Apollo teamed up with State Street to bring private credit to retail, and Vanguard is working with Wellington and Blackstone on the same. (Though, Vanguard doesn’t currently have a public-private offering widely available.)
State Street’s public-private ETF, SPDR SSGA IG Public & Private Credit ETF PRIV, was first out of the box, launching in February of this year. The launch wasn’t the smoothest, and questions remain about the viability of illiquid assets in a liquid wrapper, but listening to industry voices, it’s clear that more public-private products are on their way. Inflows into SPDR SSGA IG Public & Private Credit ETF have been muted so far but picked up in early July, so it will be interesting to see how quickly competitors come to market and investors’ response to the nascent segment. State Street already has a second public-private credit ETF planned.
Prediction 2: Vanguard’s VOO Overtakes State Street’s SPY as World’s Largest ETF
It took just seven weeks in 2025 for Vanguard S&P 500 ETF VOO to surpass SPDR S&P 500 ETF Trust SPY as the world’s largest ETF. Vanguard S&P 500 ETF started the year $40 billion behind SPDR S&P 500 ETF Trust but now claims a $46 billion lead with more than $682 billion in assets by June’s end. Bryan Armour said, “This will be a close race to watch,” but Vanguard S&P 500 ETF has already left SPDR S&P 500 ETF Trust in its dust.
It’s unlikely SPDR S&P 500 ETF Trust will reclaim its crown. The world’s first ETF has some acute disadvantages compared with the Vanguard S&P 500 ETF. Armour notes that the trust structure and higher fee are two of these drawbacks. The result has been a 6-basis-point annualized disadvantage for SPDR S&P 500 ETF Trust over the past decade. That’s a small but unnecessary burden for investors to bear.
The bigger question might be if iShares Core S&P 500 ETF IVV can pass SPDR S&P 500 ETF Trust by year-end. Like Vanguard S&P 500 ETF, iShares Core S&P 500 ETF is cheaper than SPDR S&P 500 ETF Trust and isn’t structured as a trust. Starting the year $38 billion behind SPDR S&P 500 ETF Trust, iShares Core S&P 500 ETF narrowed the gap to $14 billion by midyear. This could instead be the close race to watch.
Story 2: Crypto ETFs
The fastest-growing ETF ever is iShares Bitcoin Trust ETF IBIT. Assets have swelled to more than $75 billion after only a year and a half on sale. Strong performance, crypto-friendly regulation, and model portfolio adoption helped iShares Bitcoin Trust ETF reach its current heights, but other crypto ETFs are also making noise.
The digital assets Morningstar Category has grown from $28 billion and 43 ETFs just two years ago to more than $150 billion across 106 ETFs by the end of June 2025. With rapid growth comes froth, though, and recent crypto ETF filings raise eyebrows. Found among the filings are several memecoin ETFs, including an ETF tracking the price of Pudgy Penguin NFTs.
Bitcoin ETFs are here to stay, but time will test the mettle of newcomers in the digital assets category.
Prediction 3: ETF Share Classes Become Reality
ETF share classes are coming. They haven’t been approved yet, but that should change in the second half of this year. As of this writing, 70 firms have applied for the Vanguard-style hybrid share class, and Vanguard themselves recently threw its hat in the ring for their actively managed strategies.
Vanguard’s longtime patent on the ETF share class applied only to passive funds and expired in 2023. Firms have been eager to offer such a share class ever since its expiration. Lan Anh Tran noted in her prediction, however, that “once approved, they might not be the lifeline many hoped they would be,” and that the share class “could create more problems than it solves.” Tran cites capacity constraints, SEC Regulation Best Interest concerns, and capital gains complications as to why.
Still, ETF share classes could be a positive development for investors under the right circumstances. And until they’re approved and launched, we won’t know the impact on each fund. In the meantime, Ben Johnson will continue tracking the filings.
Story 3: Outcome ETFs Take Hold
Following several of their own launches in the space, BlackRock predicted in March that outcome ETF assets will surge to $650 billion by 2030. “Outcome ETFs,” as defined by BlackRock, include covered call ETFs, buffer ETFs, and some others. All use options to deliver a targeted outcome.
Covered call ETFs fall into the derivative-income category. These ETFs typically sell call options against a long position in some underlying asset, like the S&P 500 index, to generate income. The largest ETF in the category, and currently the largest active ETF, JPMorgan Equity Premium Income ETF JEPI, helped the category flourish and demonstrates that sensibly using options can be an effective way to restructure risk and generate income. By the end of June, there were 155 ETFs holding $130 billion in the derivative-income category.
Less sensible are single stock covered call ETFs. Sky-high yields drew billions of inflows, but funds like these frequently end up on our “worst new ETF of the year” list for sacrificing total return for income while ratcheting up risk and cost. JPMorgan Equity Premium Income ETF and others like it are a better option for income investors.
Buffer ETFs are the most explicit outcome-type strategy, delivering investors definition on both the downside and upside. Several firms even offer 100% downside protection ETFs, which shouldn’t lose money gross of fees, but only gain up to a cap—usually around 8%-10% a year.
The defined-outcome category, which houses buffer ETFs, has grown from simple buffer strategies into much more complex products in just a few years. The brand-new category now holds almost $70 billion in assets across a dizzying 408 ETFs—the most of any category.
Defined-outcome and derivative-income categories are among the fastest growing, thanks to ETFs. There’s clearly investor appetite, and issuers have been more than willing to supply new products. However, ETFs in these fastest-growing categories remain quite expensive compared with traditional index ETFs and even many active ETFs. There is room for costs to come down as the space matures.
ETF Trends To Watch in the Second Half of 2025
There’s no shortage of ETF storylines heading into the second half of the year:
- Covered call and buffer ETFs continue to proliferate, inching closer to fully replicating the structured note space
- ETF share classes are likely coming soon
- As regulations ease, crypto ETFs are gaining traction, and product development is accelerating
- How big can iShares Bitcoin Trust ETF and Vanguard S&P 500 ETF get?
- More public-private ETFs
- Many more active ETFs
So far, 2025 has been another success story for the ETF industry. But industry success does not necessarily translate to investor success. New ETFs with good long-term merit are increasingly rare, so investors should be extra selective. Expanded choice is probably a good thing on balance, but many ETFs now serve a very specific purpose, and that purpose may not be good long-term returns (for example, the hundreds of ETFs that are intraday trading tools). Investors should select ETFs that are fit for purpose.
Expect a flurry of ETF launches for the remainder of the year, with ETFs designed for increasingly narrow uses. Enjoy the fireworks, but ETF investors should be careful not to get swept up in the commotion.